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TEMPORARY DISEQUILIBRIUM AND MONEY IN A CLASSICAL APPROACH

Carlo Benetti (), Christian Bidard (), Edith Klimovsky () and Antoine Rebeyrol ()

Cahiers d’économie politique / Papers in Political Economy, 2015, issue 69, 159-184

Abstract: This paper explores a way to extend Classical theory to the analysis of disequilibrium. It introduces money as a pure means of exchange. At variance with the theories of gravitation, it introduces a market mechanism to determine prices in disequilibrium and in equilibrium as well. Money and the rule of the formation of prices are strongly connected with Marx’s analysis of the social division of labour. It is shown how this rule, expressed in monetary terms, may solve some of the basic problems that Marx left open. Temporary disequilibria occur in both physical and monetary terms. In a bisector model, an institutional device for the settlement of monetary imbalances is introduced, which leads to the final allocations and effective productions. The dynamics of the economy are those of a sequence of temporary disequilibria, and allow several possibilities to appear (local or global stability, cycles) depending on the values of the parameters.

Keywords: Classical reproduction; monetary prices; disequilibrium; social division of labour; growth (search for similar items in EconPapers)
Date: 2015
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Working Paper: Temporary disequilibrium and money in a Classical approach (2015)
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